The 80/20 Problem
On average, 80% of the inventory you buy will under perform *. That is an accepted inventory management fact & a huge deterrent to buying especially when times are tough; which has unfortunate consequences for those shoppers expecting fresh & exciting new choices whenever they walk in. As most retailers don’t replenish fast sellers the cold reality is that probably less than 10% of what is sitting in a jeweler’s showcase is actually performing as advertised.
Traditional Solutions lacking.
Vendor stock balancing programs often entail 2:1 exchanges which compounds the problem. Trying to avoid the problem altogether by substituting sample lines for live inventory often has unfortunate side effects on sales & your reputation due to the extremely poor quality craftsmanship of these lines & their inability to ramp up their quality when it comes to delivering live inventory.
A New Approach.
The 80/20 rule isn’t going anywhere; it is here to stay. So here are 3 ways to turn the situation around.
A. Expect more from your vendor.
- Covert your vendor to a partner & share the upfront inventory burden will immediately reduce your risk & leverages your return. Generally one can expect more diligence, care & support from a partner & upfront participation is more productive than picking up the pieces after the dust settles with stock balancing.
- Examine your vendor’s business model. Do they have the financial capability to hold inventory in anticipation of your needs. How is their quality & are they capable of delivering exquisite sales samples? Don’t just take their word for it – speak to their customers.
B. Introduce Technology into the Showroom
- Empower your sales associates to be the best they can be – with on demand access to your vendor’s entire collection not just what you have in the showcase (our App is a real game changer here). Instant customization & pricing, for both setting & center diamond; the ability to quickly share ideas or order via email are just two of many changes mobile technology is delivering right now across the retail sector.
C. Be Pragmatic
- Old habits die hard. Like any change don’t expect your team to embrace it overnight. It takes time. Communicate your vision firmly & communicate the successes of the first adopters to the team at large. While fear of the unknown is understandable, the reality can actually be a lot more fun & profitable than many realize.
- As we cannot predict the future we simply try to provide the customer with the best in-store selection possible using a mix of sales samples & live goods; we recommend using the App technology to expand on this selection. The more eye-catching the selection the better your results will be!